Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to:
A) give government tax revenues of $100.
B) give government tax revenues of $400.
C) reduce producer surplus by $100.
D) reduce producer surplus by $400.

Question

Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to: 
A) give government tax revenues of $100. 
B) give government tax revenues of $400. 
C) reduce producer surplus by $100. 
D) reduce producer surplus by $400.

Quizplus · Accepted Answer

The Answer of Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to: 
A) give government tax revenues of $100. 
B) give government tax revenues of $400. 
C) reduce producer surplus by $100. 
D) reduce producer surplus by $400.

Refer to the Graph Shown